Verizon Communications (NYSE:VZ) is ramping up talk about its forthcoming 5G network again, and spilled bit more details at a recent Business Insider IGNITION conference. While there, Verizon CEO Lowell McAdam said that the carrier will bring trial tests of 5G at its headquarters next month, with a slow commercial rollout in 2017.
Verizon said back in September that it would be testing the new network soon, but the details of a commercial rollout out in "2017 and beyond" shed a little more light on Verizon's plans.
At the event, McAdam implied how serious the carrier is about 5G, saying that, "I showed my board the service in November, and you don't ever go to a board with something that's not real."
The nation's top carrier (link) will start tests in Boston, San Francisco, and New York City following tests at its headquarters. McAdam noted that the 5G network speeds will be up to 200 times faster than Verizon's current 5 Mbps average speed. That would put the speed of Verizon's 5G at 1 Gbps, the same speed as Google's Fiber, its ultra-high-speed Internet service.
Why Verizon needs 5G
Verizon already has the most subscribers of any U.S. telecom and the best overall performing network, according to RootMetrics, so some may wonder why it needs to dive into 5G right now.
It's likely the carrier wants to incorporate the new technology for several reasons:
- The average wireless subscriber uses 2.4 GB of data per month, but by 2020 that will jump to 14 GB per month.
- Right now 70% of Verizon's network traffic comes from data-heavy video streaming.
- Verizon's network traffic has been growing by 75% each year.
- Data traffic from video is expected to grow 55% each year over the next five years.
McAdam noted that, "What 5G is, is much more designed for video, we call it more use-case defined. It will be more point-to-point solutions." The 5G network's ability handle even more video and faster speeds will give Verizon a leg up over its closest competitor, AT&T (NYSE:T).
What AT&T's doing with 5G?
AT&T is, let's say, less than thrilled with all of Verizon's 5G talk. Back at the CTIA Wireless trade show in September, AT&T's chief executive of AT&T Mobility Glenn Lurie said, "We're not at a point to be making promises or commitments to customers as to what 5G is."
He went on to say that, "We as an industry have been really good at over-promising and under-delivering when it comes to new technology." Ouch.
Lurie's problem with 5G is that there aren't any set standards in place yet and thus not much for carriers to start building or promising to customers. It's worth noting that AT&T was a bit skeptical of 4G technologies when Verizon starting trumpeting their benefits years ago.
Where Verizon goes from here
But Verizon isn't alone in its 5G pursuit. The carrier is working with Ericsson, Qualcomm, Cisco Systems, and others on the technology. This, in and of itself, is an indicator the Verizon is focused on some sort of standardization -- the exact thing AT&T wants.
For now, we'll have to wait for Verizon's real-world tests to see exactly how much better its 5G network will be, and how quickly it can implement commercial versions of it. It's not likely 5G will be available to all Verizon customers by 2017, but with the carrier continually talking about the new technology, it's likely the telecom wants to be far ahead of the competition in releasing it.
Another huge unknown is both how much this will cost Verizon to implement, and how much the carrier will make from 5G. Verizon will need to help cover the costs of adapting existing towers and setting up new ones to make 5G connections possible, which makes it likely that network connections will at least coast the same, if not more, for subscribers. But if there's one thing that's clear from Verizon's 5G plans, it's that the carrier is bent on staying ahead of the competition by continually upgrading its network to meet the data demands of the future.
Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Qualcomm. The Motley Fool recommends Cisco Systems and Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.